Mr. Ryan, and The Elephant in the Room
Well, it's summer. Most Europeans are away for the rest of this month. In the United States, the fiscal cliff looms, but Congress is on a break too. And, although the Presidential election is a mere three months away, the Romney/Obama battle has continued in a kind of denial mode, with both sides indulging in attack ads, mostly about social issues, while public deficits and debt continue to expand and threaten to overwhelm.
At least in America, however, a change occurred this past weekend. Romney's choice of Congressman Paul Ryan as his running mate sends a clear signal that fiscal and economic issues - and in a broader context, the question of what role government should play - will be placed front and center in the campaign.
Mr. Ryan, in his role as Chairman of the House Budget Committee, has distinguished himself as the principal author of The Path to Prosperity: A Blueprint for American Renewal, a ten-year proposal, intended to be sharply in contrast with President Obama's stance on health care, taxes, and on federal entitlement and discretionary spending. In the face of recent federal government deficits equivalent to 8-9% of gross domestic product ( compared with, for example, 3% prior to the onset of the financial crisis in 2008, and a surplus of 2.4% in 2000 ), Ryan's plan aims to restore fiscal balance over ten years - not through tax increases - but, rather, by restructuring entitlement programs like Medicare and Social Security, broadening the tax base, and more generally shrinking the size of government in the economy. Within such a framework, Ryan believes that economic growth and employment in the private sector will be stimulated, as a sounder financial base, and the ensuing restoration of confidence, lead to increased consumption and investment by individuals.
Agree or disagree with Mr. Ryan, but be ready for the elephant in the room - fiscal policy change - to be finally acknowledged and debated as the Presidential campaign proceeds.